A 1500 b 1350 c 1320 d 1390 10 assume that darcy

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a. $1,500b. $1,350c. $1,320d. $1,39010. Assume that Darcy Industries had the following inventory values:Inventory cost (on December 31, 2011) = $1,500Inventory market (on December 31, 2011) = $1,350Inventory net realizable value (on December 31, 2011) = $1,320Inventory market (on June 30, 2012) = $1,560Inventory net realizable value (on June 30, 2012) = $1,570Under IFRS, what is the inventory carrying value on June 30, 2012?a. $1,500b. $1,560c. $1,570d. $1,320Answers to Multiple Choice1. d2. c3. d4. c5. c6. c7. d8. d9. c10. aShort Answer1.Briefly describe some of the similarities and differences between U.S. GAAP and IFRS withrespect to the accounting for inventories.1.Key Similarities are(1) the guidelines on who owns the goods—goods in transit,consigned goods, special sales agreements, and the costs to include in inventory areessentially accounted for the same under IFRS and U.S. GAAP; (2) use of specificidentification cost flow assumption, where appropriate; (3) unlike property plant andequipment, IFRS does not permit the option of valuing inventories at fair value. As indicatedabove, IFRS requires inventory to be written down, but inventory cannot be written up aboveits original cost; (4) certain agricultural products and minerals and mineral products can bereported at net realized value using IFRS.To download more slides, ebook, solutions and test bank, visit
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Test Bank for Intermediate Accounting, Fourteenth Edition9 - 52Key differences arerelated to (1) the LIFO cost flow assumption—U.S. GAAP permits theuse of LIFO for inventory valuation. IFRS prohibits it use. FIFO and average-cost are the onlytwo acceptable cost flow assumptions permitted under IFRS; (2) lower-of-cost-or-market testfor inventory valuation—IFRS defines market as net realizable value. U.S. GAAP on the otherhand defines market as replacement cost subject to the constraints of net realizable value(the ceiling) and net realizable value less a normal markup (the floor). That is, IFRS does notuse a ceiling or a floor to determine market; (3) inventory write-downs—under U.S. GAAP, ifinventory is written down under the lower-of-cost-or-market valuation, the new basis is nowconsidered its cost. As a result, the inventory may be written back up to its original cost in asubsequent period. Under IFRS, the write-down may be reversed in a subsequent period upto the amount of the pervious write-down. Both the write-down and any subsequent reversalshould be reported on the income statement; (4) The requirements for accounting andreporting for inventories are more principles-based under IFRS. That is, U.S. GAAP providesmore detailed guidelines in inventory accounting.2.Explain the main obstacle to achieving convergence in the area of inventory accounting.2.IFRS specifically prohibits the LIFO cost flow method. Conversely, the LIFO cost flowassumption is widely used in the United States because of its favorable tax advantages. Inaddition, many argue that LIFO from a financial reporting point of view provides a better
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